MLM + Parents = not a good mix

April 8, 2009 2:26 PM

Multi-level marketing + parents. How do I convince my father and my step-mother that their involvement in a MLM energy company is a bad idea?

My family has had somewhat of a charmed life financially for last 10 or so years. My step-mother's late husband died in a military accident and received the military life insurance and a hefty settlement from the makers of the equipment he was using when he lost his life. So, my the family was set financially for a few years. That money has kept them afloat from the mid 90's to the mid 00's. They haven't had to work, so no real health insurance to speak. They are now nearing retirement age and are figuring out that SS and medicare benefits aren't going to be able to pay for everything that will be needed during their golden years. She hasn't even really worked during her life so she might not even qualify for all those benefits.

During this time that they haven't had to worry about money they have been successful in starting a small independent pentecostal church (think 50 people in attendance on a normal Sunday - 150 people on a Easter Sunday) in a very poor part of the US. They have invested much of their money into the church to build a sanctuary. So there is no chance that there is going to be any money coming in from the church realistically. So because of the church work and being somewhat financially secure, they were very protected from what "normal" people think of MLM's.

They've tried to make money in the past couple years by selling vitamins and shakes and other silliness like that, but no significant portion of their income has ever come from this. I thought they would have learned from those experiences that MLM is not a good way to go.

Someone got to them with this new opportunity in energy. Because energy is being deregulated, there are numerous MLM companies recruiting folks to sell their energy. It's much like the same model as Excel communications was doing in the late 90's for long distance.

Now my father is spending the time that he isn't doing church work recruiting trying to build a "downline" and signing people up for this service. It's really sad to me because my step-mother really believes that they are going to become millionaires from this endeavor. Every time I call them, she asks me to join in and help. Of course I have told them that under no circumstances am I going to help them and that a MLMer is rarely successful.

Because my father is so trusting of strangers and my step-mother is so determined to be "right" (I've split from them religiously so this may play into it a bit.) I know I am going to have a hard time convincing them to abandon this.

I'm really concerned about them. I do want them to prepare for the future financially, but I don't want them spoiling their reputation and spending the next couple of years working at something that is never going to pan out. What little success that they are having right now (I think they've made maybe 5k in the last 8 months or so) is really going to make it tough for me to present my case.

Somethings that I am searching for:

# Ways for them to test the customer service of this company to show what this company is really like.

# Some hard numbers of people that are successful in MLMing vs those that aren't - I doubt these numbers are available.

# Representations in the media about what people really think about MLM's (think Micheal in the office trying to sell phone cards to his employees)

# A way to present the cost of running this type of business compared to a regular business. (Time spent and Money spent)

# If you know of any Christian leaders that have spoken out about MLM that have any biblical basis. Or any biblical basis against doing MLM.

# Any other ideas to convince them to give this up. Hard numbers seem to be more convincing to my father.

I apologize for the wall of text, and thank you for any help you are able to provide.

posted by Drama Penguin to work & money (6 comments total)

I found this just by Googling "biblical basis against doing MLM.'
posted by torquemaniac at 2:37 PM on April 8

Here are some tips from the Federal Trade Commission to help determine whether an MLM scheme is an illegal pyramid:

1. Avoid any plan that includes commissions for recruiting additional distributors. It may be an illegal pyramid.
2. Beware of plans that ask new distributors to purchase expensive inventory. These plans can collapse quickly -- and also may be thinly-disguised pyramids.
3. Be cautious of plans that claim you will make money through continued growth of your "downline" -- the commissions on sales made by new distributors you recruit -- rather than through sales of products you make yourself.
4. Beware of plans that claim to sell miracle products or promise enormous earnings. Just because a promoter of a plan makes a claim doesn't mean it's true! Ask the promoter of the plan to substantiate claims with hard evidence.
5. Beware of shills -- "decoy" references paid by a plan's promoter to describe their fictional success in earning money through the plan.
6. Don't pay or sign any contracts in an "opportunity meeting" or any other high-pressure situation. Insist on taking your time to think over a decision to join. Talk it over with your spouse, a knowledgeable friend, an accountant or lawyer.
7. Do your homework! Check with your local Better Business Bureau and state Attorney General about any plan you're considering -- especially when the claims about the product or your potential earnings seem too good to be true.

posted by dersins at 2:50 PM on April 8

Tell them-and this is true-that involvement in MLMs directly affects their ability to minister to folks. You cannot see people as simultaneously someone to minister and someone to recruit for a downline.

Heck, when my husband and I were small group leaders in a church, I even quit selling Avon for that reason-I thought it was a clear conflict of interest.
posted by St. Alia of the Bunnies at 3:03 PM on April 8 [5 favorites]

They made 5,000 in 8 months? That's 7,500 a year. In this economy?! Where I live people would love to make that kind of money in a little side business that also allows socializing and working on your own time. Wow, I bet that amount of money would pay for both of their supplemental medical insurance (with a high deductible). Or at least one insurance policy. And there's no heavy lifting.

Frankly I just don't think you are likely to talk them out of this, anyway. Is there something else they can do for that kind of money where they live? That they can do at their age?

I think you should offer to help by doing the books for them. Make them account for every expenditure and gallon of gas ("for tax purposes"). Then at the end of the year you can say you were paid the equivalent of "X" dollars an hour and the money paid for "X" amount of insurance premiums. Then let the numbers speak for themselves. Force them to be transparent about the money. Don't be critical while you are doing the books. Wait til the end of the year. And let the numbers speak.

I wish people wouldn't spend money on churches when they have no retirement. That's the bigger con I see here.
posted by cda at 5:34 PM on April 8

They made 5,000 in 8 months? That's 7,500 a year.

Not in a MLM, it isn't. They're set up to front-end "returns" that look like a quick profit so the suckers will chase the tiger. The only way you can make money in an MLM is to a) get out early and let the other suckers pay you, or b) be an astonishing salesperson and spend more time on it than you would have on a better-paying and legit sales job.
posted by Sidhedevil at 7:48 PM on April 8

Also check Dean Van Druff's classic "What's Wrong with MLM?" -- also written from a Christian perspective.
posted by brownpau at 8:22 PM on April 8